Greek lender Eurobank posts first quarterly profit since 2011

ATHENS, May 17 (Reuters) - Greek lender Eurobank
reported its first quarterly profit since 2011 in the first
three months of the year, helped by lower provisions for bad
loans and stronger net interest income.

Kicking off the earnings season for Greek banks, the
third-largest lender by assets reported net profit of 60 million
euros ($68 million) after a loss of 175 million euros in the
final quarter of 2015.

It was Eurobank's first profitable quarter since the third
quarter of 2011.

"The results confirm that Eurobank is on course to achieve
its main aim, to be profitable in 2016. We had the first
positive result after five years of unprecedented challenges in
the Greek banking system," Chief Executive Fokion Karavias said
in a statement.

Greek banks are still troubled by large problem loan
portfolios after the country's deep, protracted recession pushed
unemployment to record highs, making it hard for borrowers to
service their debts.

More than 40 percent of the sector's loans are
non-performing, making the reduction of the bad loan stock the
biggest swing factor for Greek banks as they continue to
provision for impaired credit.

Banks are also grappling with funding gaps after a large
flight of deposits last year, which led to capital controls in
June, and they still depend on central bank funding to plug the
hole.

Eurobank, with operations in the Balkans including Romania
and Bulgaria, said provisions set aside for bad loans fell 33.4
percent from the previous quarter to 175 million euros as the
formation of new bad loans declined.

The bank, which is 2.4 percent owned by Greece's HFSF bank
rescue fund after its recapitalisation late last year, said
loans in arrears for more than 90 days dropped to 34.8 percent
of its loan book from 35.2 percent in the last quarter of 2015.

"The sale of non-performing loan portfolios at attractive
terms in Bulgaria and Romania is part of our strategy to
strengthen the balance sheets of our subsidiaries there,"
Karavias said.

Eurobank reduced its central bank borrowing to 22.8 billion
euros from 25.3 billion euros at the end of the fourth quarter,
helped by repurchase agreement transactions in the interbank
market.
(Editing by David Clarke)